Why Falling “Behind” on AI Could Make You a Better Investor

Every morning I’m like the character in Hamilton – “what’d I miss?”

First thing in the morning- Twitter, LinkedIn, Slack, group chats. Something in AI is always happening. Someone is always ahead of the curve. And the feeling isn’t just that you’re missing something – it’s that everyone can see you’re missing it. Elad Gil posted the following on X…

“People at major AI labs (using internal models) 3-4 months ahead of startup silicon valley engineers
SV founders/eng 3-6 months ahead of NY
NY founders/eng 6-12 months ahead of rest of world
Most people have no idea how fast AI shifting as 1-2 years behind SOTA”

I felt this acutely during the ICO craze and the dot com boom. Every week there was a new token, a new wallet, a new start-up that you needed to have an opinion on or risk looking like you didn’t get it. The FOMO was real but the performance anxiety was worse. You weren’t just afraid of missing an investment, you were afraid of being seen as the person who missed the news.

So we all signaled. There was a lot of performative marketing. You got in on something you didn’t fully believe in because it seemed like the right thing, the IN thing.

AI feels exactly the same to me right now. Every VC has an AI thesis. Every fund has an AI strategy. And to be fair – some of it is genuine conviction and some of it is performance. Showing the room you’re up-to-speed may be as important as IRR at the moment.

For an operator this instinct is probably healthy. Only the paranoid survive!! Speed is the advantage and each model improvement might unlock a real productivity or performance gain. Learn quickly and embrace new tools – but also to a point.

For an investor this instinct is distracting at best and can hurt returns at worst. I wonder if consuming a lighter media diet is part of the answer. Take in less media, go to fewer conferences, spend time outside the tech bubble.
I often think about Warren Buffett’s choice to live in Omaha, far outside Wall St. In these moments, NYC being 3 months “behind” SF might actually be an advantage for VCs.

Conviction isn’t what you feel when everyone else is excited or constantly feeling you need to catch up. It’s a genuine belief in an entrepreneur’s’ vision for the next decade.

All said while I scroll LinkedIn…